About 3.3 million Canadians say they are dealing with income volatility to the extent their monthly income can fluctuate by 25 per cent or more, according to a study published Wednesday.

In what appears to be to a first in Canada, Toronto-Dominion Bank commissioned a survey to look at income volatility and how those subjected to it are more likely to face financial challenges and ultimately lack confidence in their financial future.

“What this survey actually does, all of us realize this is a problem, but this really focuses us on how big the problem is,” Bharat Masrani, chief executive of TD, said in an interview.

The survey found 37 per cent of adult Canadians — about 10 million — maintain they experienced moderate to high levels of income volatility over the past year. “The implications, not only for the individual but for our country are pretty profound,” Masrani said. “It’s a pervasive problem.”

He said the solution will have to involve many stakeholders, but his bank has tried to advise the public on better ways it can manage finances to deal with the volatility.

Part of the solution, said Elizabeth Mulholland, chief executive of Prosper Canada, a national charity that encouraged TD to do the study, is to look at the very nature of work and solutions to adapt to that. “We need to look at what kind of policies and labour markets we are providing to people to help them manage and be resilient,” Mulholland said.

“One thing we need to do is look at modernizing (employment insurance), modernizing our employment and income support programs. Employers also have to look at their own practices. Can we give employees more lead time about when they will be needed, how many shifts we will need them for.”

The online survey, which was conducted by Ipsos Canada from April 13-23, 2017, using a representative, national sample of 3,000 Canadians, 18 years or older, defined income volatility “as income that is inconsistent (not received on a regular and predictable basis), unstable (amount varies each time it is received), and that fluctuates month to month by a significant percentage.” It is considered accurate 19 times out of 20, plus or minus two percentage points.

The study shows income volatility is more likely to be experienced by part-time, self-employed, seasonal workers and the unemployed. The top three causes of fluctuation in month-to-month income were irregular hourly pay (28 per cent), multiple sources of variable income (19 per cent) and self-employment (18 per cent).

Masrani said his bank is trying to lead. It has a lot of part-time workers, but estimates 90 per cent of those employees qualify for benefits. “You have to adjust to the new reality. You are going to have a lot of folks that are part-time,” he said.

By using reported behaviours and perception when it comes to saving, spending, borrowing, and financial planning the report attempts to gauge the overall financial health of Canadians. In all four categories, those with higher income volatility show significantly lower financial health.

When it comes to savings, the survey found 44 per cent of Canadians with high levels of volatility show low financial health versus 28 per cent of those with low levels of income volatility. As for financial planning, Canadians with high levels of income volatility are almost twice as likely — at 34 per cent to 18 per cent — to show low financial health than those with low levels of income volatility.

The survey also found respondents experiencing moderate to high levels of income volatility were more likely to delay buying groceries, paying down a minimum amount on a credit card or paying off monthly bills. Those with high level of income volatility are twice as likely to feel stressed about their personal finances as those with low amounts of income volatility.

In a lunchtime speech in Toronto, Mulholland emphasized that financial education alone will not solve the problem of income volatility.

“The transformation of our labour markets over the past 30 years not people’s individuals poor financial behaviour (are driving the economic circumstance some face),” she said. “Low income people actually are quite good money managers. You can’t plan, if you don’t know how much money is coming in the door.”

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